The jump in the April consumer price index, reported by
Statistics Canada on Wednesday, was the first upturn in five
months and topped the 1.4 percent forecast by market analysts.
Month-on-month, the rate was up 0.8 percent from March.

The surprisingly high number pushed the Canadian dollar to
a two-month high and prompted Prime Minister Stephen Harper to
downplay the price pressures.

Statistics Canada also reported on Wednesday that the
composite leading indicator inched up 0.1 percent in April,
suggesting a slight pickup in economic activity after two
sluggish months.

The core inflation rate, which strips out gasoline and a
number of other volatile items, also quickened more than
anticipated in April. Core CPI rose 0.3 percent for a 1.5
percent annual rate. That compares with a median analyst
forecast of 1.3 percent.

Some economists said the numbers will force the Bank of
Canada to pause in its rate-cutting cycle next month.

"Still not alarming, but I think it puts any discussion of
a move in June off the table and leaves open the prospect for
further easing later if the economy warrants," said Craig
Wright, chief economist at Royal Bank of Canada.

Others think the bank should still reduce interest rates at
the first opportunity.
Continued...